Finnair orders Airbus' new jet

March 09, 2007|By Julie Johnsson, Tribune staff reporter

Airbus SAS on Thursday chalked up its first airline sale of the midsize jet it hopes will counter Boeing Co.'s best-selling 787 Dreamliner.

Finnair ordered 11 of the planes, known as the A350 XWB, as well as seven other long-range Airbus aircraft in a deal worth about $2.6 billion. Leasing company Pegasus Aviation earlier ordered two of the new jets.

That leaves Airbus with much ground to cover before its new plane will pose a serious threat to Chicago-based Boeing, analysts say.

Boeing has tallied about 450 orders for the 787, which is slated to be delivered to customers starting in mid-2008, five years ahead of the new Airbus jet.

Airbus executives remain optimistic that they'll be able to carve out a sizable share of the market for wide-body aircraft, predicted to generate total sales of $1.17 trillion through 2025.

"We say the best is yet to come, there's lots to play for," said Chris Jones, Airbus North America vice president for marketing. "It's still the very early days in the cycle."

But if it is to challenge Boeing, Airbus must sell the latest version of the A350 to airlines that previously had agreed to buy an earlier model of the aircraft that was smaller and less expensive. Finnair is the first such customer to convert its order to the new jet.

Airbus scrapped the previous version last year after some customers complained that it lacked the technical breakthroughs of the 787. The A350 XWB, which was unveiled in December, will boast a frame made of composite material like the Dreamliner and better fuel efficiency than Boeing's 787 and 777 models, Airbus says.

"If they want to compete in the 200- to 400-seat segment, this is their future," said Richard Aboulafia, aviation analyst with Teal Group Corp. "It's 45 percent of the market by revenue."

The European planemaker has not revealed engineering specifications for the aircraft, however, to the annoyance of some potential customers.

According to Bloomberg News, Qatar Airways, which had committed to order 60 of the previous A350s, is threatening to shift its sales to Boeing if Airbus doesn't produce detailed information on the new jet's parameters by June.

"The big question for Airbus right now is when are they going to have this aircraft sufficiently designed for airlines to make orders," said Paul Nisbet, aerospace analyst with JSA Research Inc., a Rhode Island-based market research firm.

Airbus also has yet to negotiate an agreement with General Electric Co. to use its popular new fuel-efficient engines on the A350 XWB, said Rick Kennedy, a spokesman with GE Aviation.

That could cause some airlines that have outfitted their fleets with GE engines to shy away from the new aircraft, Nisbet said.